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3471. Blue Economies of the Indian Ocean Region: Japan’s Role in Transition to Sustainable Development and Growth

Author:
Monika Chansoria
Publication Date:
08-2020
Content Type:
Policy Brief
Institution:
Japan Institute Of International Affairs (JIIA)
Abstract:
The Blue Economy concept was first articulated in 2012 by the Small Island Developing States (SIDS) at the 2012 Rio+20 Summit on Sustainable Development. This novel idea was coupled with a concurrent approach that sought to transform traditional ocean economies into an ecosystem harnessing oceanic resources for better conservation of the marine environment. Ever since, the Blue Economy concept and its implementation has remained an evolving one. The broad consensus is that diminishing land resources have induced greater pressure on ocean assets to feed faster growth. At the same time, realization of the dangers of unsustainable approaches is equally compelling. The oceans remain the foremost climate stabilizers as they directly absorb heat and recycle an overwhelming share of greenhouse gases. Rising sea levels are causing submergence of valuable land, and extreme weather conditions and rising temperatures will eventually disrupt the water cycle, and hurt agriculture, fisheries and the rich marine biodiversity. The need to find mitigating solutions ensuring that future economic growth and development be more sustainable remains more pronounced than ever. As per few estimates, in many sectors, the ocean-based productivity will exceed the corresponding land-based production both in terms of value and employment generation by 2030. However, these benefits would likely accrue only in case of the oceans remaining healthy.
Topic:
Climate Change, Development, Economy, and Sustainable Development Goals
Political Geography:
Japan and Indian Ocean

3472. Halford J. Mackinder's 1904 Geographical Pivot: Context and Evidence to 21st Century's 'Indo-Pacific Strategic Heartland' Application

Author:
Monika Chansoria
Publication Date:
09-2020
Content Type:
Policy Brief
Institution:
Japan Institute Of International Affairs (JIIA)
Abstract:
Understanding classical geopolitics remains crucial to the study of international relations based on considerations of location and physical geography and to their adaptation of political goals. The said process has been a dynamic and evolving one, with the effects of location, geomorphology, and conditions for national power being regarded as essential constituents. It is often argued that geopolitics has always ‘self-consciously’ been a theory of foreign policy, wherein physio-geographical conditions were a vital parameter of the studies that explained the expansion of European powers in the past. From thereon, a dominating geostrategic prediction for the 21st century was that it would be an Asian one. That notwithstanding, Asian states find themselves at a strategic crossroads in the midst of multiple, overlapping challenges, which include: putting their domestic fiscal houses in order; ensuring long-term economic growth; and a critical need to shape a leaner and technologically advanced joint force in the military sphere. Even as the United States and its alliance partners in Asia hopefully work toward cooperative exits from the increasingly unsustainable current global co-dependency—where the economic growth is being viewed through continued consumption and utilization of resources loaned by others—Washington’s approach and focus on renewing its economic and military power is being watched carefully. The US position has been confronted with serious challenges, all of which, if left unaddressed, could undermine the current security environment.
Topic:
Foreign Policy, Geopolitics, Economic Growth, and Geography
Political Geography:
United States of America and Indo-Pacific

3473. Why Canada Must Embrace a Free and Open Indo-Pacific

Author:
Jonathan Berkshire Miller and Stephen Nagy
Publication Date:
10-2020
Content Type:
Policy Brief
Institution:
Japan Institute Of International Affairs (JIIA)
Abstract:
How has Canada viewed the scope of its engagement in Asia? The traditional lens to look at such engagement has been through the Asia-Pacific framing – defining the region largely through our experience in the multilateral architecture such as the Asia Pacific Economic Cooperation (APEC) on the trade side, and the Association of Southeast Asian Nations (ASEAN) Regional Forum (ARF) on the political-security side. Canada was a founding member of APEC in 1990 and has been a dialogue partner in the ARF since its formation in 1994. Aside from these two main vehicles, Canada has been active in the international development space over the years through and is member of the Asian Development Bank, and more recently joined – while not before considerable internal debate – the Chinese-led Asian Infrastructure Investment Bank in 2017.
Topic:
Bilateral Relations, International Development, Multilateralism, Investment, Trade, and ASEAN
Political Geography:
Japan, China, Canada, Asia, North America, Korea, and Indo-Pacific

3474. Whose “Indo Pacific”? competing visions of regional order

Author:
Thomas S. Wilkins
Publication Date:
11-2020
Content Type:
Policy Brief
Institution:
Japan Institute Of International Affairs (JIIA)
Abstract:
The introduction of the term “Indo Pacific” is designed to focus attention on a vast geographic space stretching from the eastern coast of Africa and the Gulf to the eastern seaboard of Asia, via its great continental heartland. Its advocates claim it represents nothing less than the conceptualisation of a new “mental map” precipitated by the intensifying trade and energy flows across between the Indian and Pacific Oceans, and the pulsing economies of the Asian continent that they propel forward. In short, the Indo Pacific is now viewed by many as the heart of the global economic and political system. As the discussion below reveals the Indo Pacific mental map is a conscious attempt by certain governments to reframe or “rescale” the region they inhabit, or must interact with. In the case of several key countries featured below, the Indo Pacific has now displaced the earlier “Asia Pacific” regional descriptor. Yet this by no means indicates consensus on its exact definition and interpretation among such states, nor its universal acceptance among others.
Topic:
Geopolitics, Borders, and Regionalism
Political Geography:
Asia and Indo-Pacific

3475. Japan at a Political and Strategic Crossroads: Complex Strategic Choices and a Balancing Act?

Author:
Valerie Niquet
Publication Date:
12-2020
Content Type:
Policy Brief
Institution:
Japan Institute Of International Affairs (JIIA)
Abstract:
On August 28, Shinzo Abe, the longest-serving prime minister in Japan (2,822 days) stepped down and was replaced by Yoshihide Suga, Abe’s former Chief Cabinet Secretary. Having long focused on internal politics and the intricacies of Japanese bureaucracy, Prime Minister Suga is now facing the task of navigating an increasingly tense and uncertain strategic situation, with stakes going far beyond Japan’s borders and immediate environment in the context of the unresolved COVID-19 pandemic.1 The challenges that Prime Minister Suga is facing are manifold and diverse; some can be considered long-term or permanent. Others are relatively new or continued trends with new effects on the strategic balance of power and threats to the region and beyond.
Topic:
Politics, Bureaucracy, COVID-19, and Strategic Interests
Political Geography:
Japan and Asia

3476. Deglobalisation in the context of United States-China decoupling

Author:
Alicia Garcia-Herrero and Junyun Tan
Publication Date:
12-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
After decades of increasing globalisation on every front, from trade – pushed further by the growing role of value chains – to technology, movement of people and investment, there now seems to be a turn towards slower globalisation if not deglobalisation, at least in some areas. Deglobalisation is not a new concept but rather a megatrend which has been seen before, for example right before the First World War. Signs of deglobalisation, measured by decelerating trade and investment, and smaller global value chains, started to appear already in 2008. But this trend seems to have accelerated because of the United States’ push to contain China in the context of the strategic competition between the two. Such containment is apparent not only in bilateral trade and investment flows but also in technology. COVID-19 has been a second very important factor contributing to deglobalisation. The most obvious impact has been in movement of people. However, the trend towards deglobalisation is much less evident for finance, with the exception of foreign direct investment, though increasing attempts by the US and China to decouple particular types of financial flows are emerging, including the delisting of Chinese companies from US stock exchanges and the imposition of sanctions for transactions with certain Chinese companies and individuals. Overall, it is too early to confirm the depth and the sustainability of the current wave of deglobalisation, but an increasing number of signals suggest a trend of deglobalisation is underway.
Topic:
Globalization, Bilateral Relations, Geopolitics, Investment, Trade Policy, and COVID-19
Political Geography:
China, Asia, North America, and United States of America

3477. Green certificates: a better version of green bonds

Author:
Dion Bongaerts and Dirk Schoenmaker
Publication Date:
11-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The market for green bonds is growing rapidly and has been boosted by the European Commission’s plan to raise through green bonds 30 percent of the up to €750 billion that will be borrowed under the Next Generation EU coronavirus economic recovery programme. But while green bonds can reduce the financing costs of green projects and technologies, their current design means they fall short of fulfilling their full potential. Issuing green bonds alongside regular bonds fragments bond issues, reducing liquidity and thus increasing financing costs. Moreover, green bond prices reflect liquidity, credit risk and environmental performance jointly, which makes it difficult to isolate the part of the return on the bonds that relates to environmental performance. We propose an alternative: issuance of regular bonds with attached green certificates that ensure earmarking for green purposes. The new design would lead to more liquid securities (as only regular bonds are issued), which would reduce financing costs and in turn would provide incentives to start a greater number of environmentally-friendly projects. The new design would also make market prices more informative about environmental performance. In addition, green certificates would address the criticism that green bonds are used mostly for refinancing existing green projects rather than for new projects. Sovereigns are among the largest issuers of bonds and are therefore natural candidates for implementation of green certificates. The European Commission could also issue regular bonds and green certificates to finance the European Union’s recovery package, and should include green certificates in the under-preparation EU Green Bond standard. Commission issuance of green certificates would give a major boost to EU bonds as liquid safe assets while promoting green investment.
Topic:
Climate Change, Energy Policy, Finance, and Sustainability
Political Geography:
Global Focus

3478. Financing the European Union: New Context, New Responses

Author:
Clemens Fuest and Jean Pisani-Ferry
Publication Date:
09-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Roughly two thirds of the European Union’s budget is financed out of member states’ national tax revenues. These resources, based on gross national incomes, are transparent, fair and in line with the principle of subsidiarity but they lead to political debates that emphasise the cost of EU spending rather than the benefits, and add to the perception of the EU budget in terms of net balances, rather than value added. The financing of the EU budget must be reassessed in the light of the July 2020 decision to launch the Next Generation EU programme. Budget resources could include a plastics charge, a carbon border adjustment mechanism, a digital tax, revenues from emissions trading and a financial transactions tax. We evaluate these options against four criteria: whether the origin of the revenue can be assigned to a particular member state; whether the revenue can be raised in isolation or requires pan-European tax coordination; whether the new resource can help reduce tax distortions in the EU; and whether the resource is related to EU policies. Revenues from emissions allowances fit these criteria best. Carbon emissions do not primarily cause damage only where they occur. Taking the EU cap on emissions as a given, additional emissions in a particular member state should be regarded as a negative externality on other member states. Emission reduction objectives are set at EU level. Whoever auctions off an allowance, wherever the corresponding emission occurs in the EU, and wherever the resulting good or service is consumed, the impact on common policy outcomes is the same. In this regard, proceeds from the sale of emissions trading system allowances are not that different from customs duties. Compared to the ETS, the other candidates for EU own resources are less convincing. Carbon border adjustments are intended to limit international competitive distortions rather than to generate revenue. Digital taxes and minimum corporate taxes are best left to the process underway in the Organisation for Economic Co-operation and Development. On a financial transactions tax there is no agreement within the EU. Total ETS revenues up to 2050 would approach €800 billion in a realistic scenario and possibly even €1.5 trillion assuming the scope of the ETS and the share of auctioned permits are increased. ETS revenues therefore would be largely sufficient to repay the Next Generation EU debt. However they would generate distributional effects, and so part of the revenues should finance grandfathered rights that would accrue to the member states. The EU can tackle the distributional issues involved in the reform of own resources.
Topic:
Budget, European Union, Finance, Tax Systems, COVID-19, Decarbonization, and Digitalization
Political Geography:
Europe

3479. Emerging Europe and the capital markets union

Author:
Alexander Lehmann
Publication Date:
09-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The European Union’s capital markets union (CMU) plan is in urgent need of a revamp. Because of Brexit, EU capital markets and supervision need to become more integrated. The ongoing deep recession increases the need for equity finance mobilised by capital markets. The eleven EU countries in central and south-eastern Europe which joined the EU in 2004 and after (EU11) are particularly affected by the ongoing consolidation of exchanges, which has diminished liquidity in smaller markets and in the traded securities of mid-sized companies. Corporate funding remains even more bank-dependent in the EU11 than in the rest of the EU. Equity capital, whether in the form of listed shares or directly supplied by investment funds, is particularly underdeveloped. Even though the sustained and superior growth record in the region compared to the rest of the EU should be a magnet for investors, cross-border exposure to traded equity in the region remains very limited. To gain broader acceptance in all EU countries, CMU will need to support more forcefully funding for small and medium enterprises (SMEs), and foster market integration throughout the single market, including outside the euro area. The immediate priorities for the EU should be to revise market regulation and facilitate capital market access by smaller firms. Lighter standards in dedicated SME markets should be widened for newly-listed companies, but should not be available to more mature listed companies. In this way, high standards of transparency and integrity, which have been bolstered by post-financial crisis regulation, will be preserved. The EU11 countries need to embrace corporate governance rules and greater transparency of company financial data, which would facilitate equity finance. They must also attract investors who will seek disclosure of environmental, social and governance performance of issuers. Much could be done to foster liquidity on national exchanges, including by embracing the inevitable further consolidation of exchanges and other infrastructure.
Topic:
Markets, European Union, Regulation, Finance, Business, Capital, Corporate Governance, and Private Equity
Political Geography:
Europe

3480. Why has COVID-19 hit different European Union economies so differently?

Author:
André Sapir
Publication Date:
09-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
All European Union countries are undergoing severe output losses as a consequence of the COVID-19 crisis, but some have been hurt more than others. In response to the crisis, EU leaders have agreed on a Recovery and Resilience Fund (RFF), which will help all EU countries, but those hit hardest will benefit most. This Policy Contribution explores why some countries have been hit economically more than others by COVID-19. Using statistical techniques described in the technical appendices, several potential explanations were examined: the severity of lockdown measures, the structure of national economies, the fiscal capacity of governments to counter the collapse in economic activity, and the quality of governance in different countries. We found that the strictness of lockdown measures, the share of tourism in the economy and the quality of governance all play a significant role in explaining differences in economic losses in different EU countries. However, public indebtedness has not played a role, suggesting that that the European Central Bank’s pandemic emergency purchase programme has been effective. We used our results to explore why some southern EU countries have been more affected by the COVID-19 crisis than some northern countries. Depending on the pairs of countries or country groupings that we compared, we found that differences in GDP losses were between 30 and 50 percent down to lockdown strictness, between 35 and 45 percent to the quality of governance and between 15 and 25 percent down to tourism. This could have implications for the allocation of the RRF between recovery and resilience expenditures. Supporting the recovery through a combination of demand and supply initiatives is important to ensure that countries rebound as quickly as possible from the COVID-19 crisis, without leaving too much permanent damage to their economies. But in many countries, especially some of the southern countries hit hardest by the COVID-19 crisis, resilience is a major sticking point. Too often, in some of these countries, the poor quality of governance has had a negative impact on their resilience, as the relatively large size of their GDP shocks has demonstrated. It is crucial therefore that RRF programmes devote sufficient attention (and resources) to improving the quality of governance in these countries.
Topic:
Governance, European Union, Macroeconomics, Resilience, and COVID-19
Political Geography:
Europe